Kazakh companies are concerned about soaring import costs and stiffer competition from Russian rivals since the Central Asian country joined a customs union with Russia and Belarus on Jan. 1, a business lobby said.
"Kazakhstan imports as much as 80 percent of consumer goods, and costs have doubled for companies that import everything from fruits and vegetables from China to textiles from Turkey," Timur Nazkhanov, deputy head of the Independent Association of Entrepreneurs, said in a written reply to questions. "Kazakh business is worried that large Russian companies may oust domestic producers" from the market. Nazkhanov said the association has 2,300 members.
Economic growth in Kazakhstan, which holds 3.2 percent of the world's oil reserves according to BP Plc, slowed to 1.2 percent last year from 3.2 percent in 2008. The economy grew 10 percent on average each year between 2000 and 2007 as energy and commodity prices rose.
"Unfortunately the custom union doesn't take into account the interests of Kazakh businesses, especially small and medium- size enterprises," Nazkhanov said. "There are more benefits for big oil and metal producers that export via Russia."
Kazakh Prime Minister Karim Masimov held talks in Moscow today with his Russian counterpart, Vladimir Putin, on the customs union, which caused Kazakhstan to increase customs duties on average by more than half to 10.6 percent, according to the Industry and Trade Ministry.
Common Customs Space
Putin said "it's important not to lose momentum" in developing the customs union, RIA Novosti reported. The three member countries agreed to move to a common customs space on July 1 and a single economic space by Jan. 1, 2012.
The leaders of the three countries will meet in Moscow on May 21 to discuss the union, the state-run news service reported, citing Masimov.
The Kazakh government will collect an additional 61.3 billion tenge ($416 million) in customs duties this year after it joined the customs union, according to the Economy Ministry. The Caspian Sea country forecasts exports of $49.6 billion and imports of $34.2 billion.
More than 30 percent of Kazakh imports come from Russia, aren't subject to customs duties under the union and should become less expensive, Almaty-based ATF Bank, a unit of Italy's UniCredit SpA, said in a research note earlier this week.
Taking Russia's share of Kazakh imports into account, "the picture isn't quite so gloomy," ATF said. Considering the source countries of Kazakh imports, the average duty is 5.4 percent under the customs union compared with 4.2 percent previously, the bank said.
In current conditions, the exchange rate may become the main tool to regulate trade, and tenge appreciation may proceed slowly, ATF said.
March 3 (Bloomberg)
